Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

Retailing and wholesaling, Retailing and Wholesaling   Retailing an...

Retailing and Wholesaling   Retailing and wholesaling consist of various organizations bringing services and goods from the point of manufacture to the point of use. Retail

Explain objective and task method, Q. Objective and Task Method? This s...

Q. Objective and Task Method? This scheme considers advertising as an investment and a mean to achieve long-term business objectives. Krick Patrick has defined objectives as we

Propose an effective extended marketing mix, Question 1: You work for a...

Question 1: You work for a new regional airline that has recently started serving Mauritius. It is a low-cost budget airline. a. Explain what are the characteristics of ser

Fractions, i do not understand multiplying, dividing, subtracting, and addi...

i do not understand multiplying, dividing, subtracting, and adding fractions

Art of selling, Art of Selling In the Art of Selling, we will describe ...

Art of Selling In the Art of Selling, we will describe how to make your job of selling very interesting, develop your skills and enhance your sales. Satisfaction comes while do

What are interest of organization - customers and society, What are the int...

What are the interest of organization, customers and society? We should be specified here the interests of the organization, customers, and society. Very frequently these inter

Explain the types of advertising appeal, Question 1: (a) Organisations...

Question 1: (a) Organisations make use of advertisements to promote its products and services. Explain the types of advertising appeal that are used. (b) Civil Society Org

Test Marketing, What is test marketing? Explain the various approaches that...

What is test marketing? Explain the various approaches that are followed by FMCG companies in test marketing

Market orientation, Read the journal article Lafferty, B. A., & Hult, G. T....

Read the journal article Lafferty, B. A., & Hult, G. T. M. (2001) ‘A synthesis of contemporary market orientation perspectives’, European Journal of Marketing, 35 (1/2), pp. 92–109

Words of american marketing association for research, Illustrates the words...

Illustrates the words of American Marketing Association for marketing research? In words of American Marketing Association as, “marketing Research can be explained the gather

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd